Sears Holdings 4Q falls on hard times

HOFFMAN ESTATES, Ill. Sears Holdings today reported net income of $426 million, or $3.17 per diluted share, for the fourth quarter ended Feb. 2, compared with net income of $811 million, or $5.27 per diluted share, for the fourth quarter ended Feb. 3, 2007. For the fiscal year ended Feb. 2, 2008, net income was $826 million, or $5.70 per diluted share compared with net income of $1.5 billion, or $9.58 per diluted share, for the fiscal year ended Feb. 3, 2007.

Sears Holdings said the fourth quarter and full year declines in income reflect lower operating results at both Sears Domestic and Kmart, partially offset by improved operating results at Sears Canada.

The company reported that fourth quarter domestic comparable-store sales declined 4.5% in the aggregate. For the year, domestic comparable-store sales declined 4.3% in the aggregate. According to Sears Holdings the comparable-store sales declines at both Kmart and Sears Domestic reflect increasing competition and the impact of unfavorable economic conditions, including a deteriorating housing market, a decrease in consumers' disposable income and the increased costs of consumer staples.

"Our fourth quarter and full year results continued to be negatively impacted by the worsening economic conditions faced by both our customers and competitors, as well as increased markdowns taken to clear excess inventory," said Bruce Johnson, Sears Holdings' interim ceo and president. "Given the challenging retail environment, we will work to improve and tighten our management of costs and inventory levels in 2008. Further, we believe that our recently announced restructuring will position us to navigate the difficult conditions that lie ahead and operate our businesses more efficiently and effectively."